Category: Editorial

Property managers know—now is their time to shine

Posted on by Sarah

The pandemic shut down nearly all sectors of the economy but now, Texas has started to open back up. But it’s not like flipping a switch—there are countless property management considerations before, during and after the return of commercial tenants to their spaces. REjournals recently hosted a webinar addressing this very topic, bringing together three strong Houston CRE voices. Participating in the webinar were Shawn Harvey, managing director of integrated services at Lee & Associates; Hunter Lane, vice president of Lane Property Tax Advocates and Robert Tyler, CPM, senior general manager at JLL. The panelists dove right in discussing the early conversations they are having with clients who are unsure of how to proceed. Their initial concerns surrounded the health of the people coming to the building. After that, unsurprisingly, is the current and future impacts to rental income. “Early on we had a few tenants come in saying they were going to have difficulty paying rent,” said Harvey. “Once you start asking more in-depth questions, a lot of them backed off.” Click to read more at www.rejournals.com.

Everything’s (getting) bigger in Texas

Posted on by Sarah

2020 is a census year, so soon we’ll have a pretty good picture of the demographics, location and size of the U.S. population. But we’re pretty good at estimating too, and the estimates thus far show that Texas is definitely in growth mode. There are storm clouds on the horizon for one market, however. According to data from the U.S. Census Bureau, Texas was home to six of the 10 counties with the largest population gains: Bexar, Collin, Dallas, Harris, Tarrant and Travis Counties. Among the fastest growing counties in the nation, Texas tallied more than any other state as Comal, Hays, Kendall and Williamson Counties all made the list. Among metro areas that the Census Bureau analyzed, Texas was home to three of top ten MSAs with the largest population gains between 2010 and 2019. The Dallas-Fort Worth-Arlington metro had the greatest jump in that time frame, increasing by 1,206,599 residents—a 19.0 percent rise. Meanwhile, the 510,760 new residents in the Austin metropolitan area accounted for a whopping 29.8 percent increase. Click to read more at www.rednews.com.

Hope Lingers For Retail, but Retail Real Estate is in for a Long Journey Back to Profitability

Posted on by Sarah

With stay-in-place orders keeping customers at home, the retail sector is set to face pressure unlike other asset classes. And as the NOIs at retail properties contract, that financial stress will radiate up the real estate infrastructure, from retailers shuttering their stores, to landlords unable to
collect rents to lenders themselves. How much pain retailers feel is directly tied to how long our pandemic countermeasures are kept in place. As of this writing, for example, Dallas County’s “Safer-at-Home” order is in effect until April 30, which rescinded and earlier extension by the commissioner’s court approving the county’s disaster declaration until May 20. “If we open the doors May 1, I think we will just fine. If we open the doors on June 1, there’s going to be collateral damage,” said Jennifer Pierson, managing partner at Dallas-based STRIVE. “If we go into August, I don’t think the word
‘severe’ would be an understatement.” Before the pandemic, retail was already suffering as e-commerce took its toll and consumers opted to shop from home. The one shining segment of the sector was experiential retail, a tag applied to everything from fitness centers to DIY pottery shops, but which is largely comprised of restaurants and bars. With shelter in place orders now keeping consumers away from these establishments too, many are in dire straits. The $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act, passed by Congress and signed into law by President Donald Trump on March 27, seeks in part to address this issue. Click to read more at www.rednews.com.

Support in Seabrook: The City’s EDC steps up to help businesses

Posted on by Sarah

In many ways, the City of Seabrook had prepared for a disaster of this level. Even before Hurricane Ike slammed into Galveston Bay in 2008, the city had
developed a plan in case the inevitable occurred. But the COVID-19 storm that started brewing in early 2020 hit in an entirely new way. “It was certainly like a tidal wave that hit shore so fast. We saw it coming, we started to prepare and then it hit. We just went straight into emergency mode,” says Paul Chavez, director of the Seabrook Economic Development Corporation. “It’s unprecedented because the whole world is experiencing something as significant as Ike. Everybody is affected by it.” He says that in early February, the city started reaching out to citizens and businesses, trying to prepare them for what lay ahead. “A lot of hard decisions had to be made, but we knew that for the safety of everybody, we had to make those decisions and enforce them,” Chavez says. In some cases, it means abiding by and enforcing decisions made at a higher level, such as Harris County’s Stay Home, Work Safe order. “We’re asking our residents to work from home if they can and that’s the same policy we’re using at the city,” says Chavez. There are exceptions to the rule, such as EMS crews, firefighters, police officers, and public works. In addition to responding to emergencies
throughout the city, Chavez says first responders are also checking on local businesses, which may or may not be open. “They make sure that there isn’t any kind of suspicious activity going on inside because we know a lot of people are scared about looting and burglaries,” he explains. Click to read more at www.rednews.com.

Force Majeure: The Effect of COVID-19 on Contracts

Posted on by Sarah

As we roll into a second month of stay-at-home orders triggered by the COVID-19 pandemic throughout Texas, the commercial real estate industry is beginning to fully feel the impact. Non-essential retailers have been forced to shut their doors, in some cases eliminating all potential for revenue. Those employees, furloughed or laid off, face a similar dilemma: how do you pay your mortgage or rent when no money is coming in? The answer for some is to turn to the “force majeure” clause of their contract if they negotiated one. “Typically a force majeure clause has been something that people don’t pay much attention to. It’s one of the boilerplate paragraphs toward the end of the contract,” said David Groff, a shareholder with Wilson Cribbs + Goren, a 20-attorney law firm that focuses on commercial real estate. “That doesn’t mean it’s any less important than any other provisions in the lease, but it sometimes doesn’t get the attention it requires because people get so comfortable for so long.” First, have a conversation with tenants about the state of their business and review their
contract. “Not every lease is going to be the same. Not every interaction between landlord and tenant will be Joined by senior partner Scot Clinton, the pair offered insight into what force majeure is, how courts have responded to it and how both tenants and landlords can respond during REDNews’ April 9 webinar on the topic. “The gist to identify specific types or categories of events that will relieve parties of their duty to perform. In Texas, the general approach to interpreting a force majeure clause, if there is one, really does boil down to the actual terms of the clause,” Clinton explained. Click to read more at www.rednews.com.

COVID-19 Response: Houston’s HI_REIT Focuses on Tenant Success

Posted on by Sarah

Editor’s note: This article was written in early April and reflects Hartman Income REIT’S (HI-REIT) response plan at that time, which company managers say will evolve as needed. Please read it as a snapshot in time and as an example how one Texas property management company responded to the COVID-19 pandemic. From hurricanes to tornadoes, the staff of Houston-based Hartman Income REIT (HI-REIT) has learned to weather just about any storm. But the one that hit in early 2020 was unlike anything the company had seen in its 35 years. As covid-19 spread from one part of the world to another, Hartman leadership kept an eye on the headlines.“We knew stay-at-home orders could take a toll on our tenant businesses, so we started assessing which businesses could be hit hardest,” says Shane Cawood, the company’s Director of Operations of Asset Services. “We began the conversations about what their needs could be and how we could add value as partners to help get their people and the businesses through all this.” “… reaching out …” With about 60 properties located in the greater Houston, San Antonio and Dallas areas filled with approximately 1500 tenants, that is no easy feat. Still, it was a priority for Hartman, which is built on “Exceptional Service + Inspired Values.” “There’s a saying that character is not created by crisis, but it is revealed. Honestly, I’ve never been prouder of the company for which I work,” says Mark Torok, COO, Secretary & General Counsel. “We are trying to go above and beyond what other companies may be doing for the benefit of our tenants.” Click to read more at www.rednews.com.